Commercial loan rates are not a single number. They depend on your loan type, property, deal structure, lender, and the current market. A bridge loan closing in 10 days carries a very different rate than a 10-year permanent loan on a stabilized apartment building — and both are the right answer in the right situation.
Most investors searching for commercial loan rates are asking the wrong question. The right question is not “what is the lowest rate” but “what is the right structure for my deal.” A lower rate on the wrong loan costs you more than a higher rate on the right one.
This guide breaks down real rate ranges for every major loan type, explains what drives those rates up or down, and shows you what fees to watch for beyond the interest rate. Nelson Funding has placed over $600 million across 80+ projects. We will show you exactly how we think about rates so you can evaluate your deal clearly.
What Are Commercial Loan Rates?
Commercial loan rates are the interest rates charged on financing secured by income-producing or investment properties. Unlike residential mortgages, commercial rates are not standardized. Every deal is priced individually based on risk, structure, property type, and lender appetite.
Commercial rates are expressed as an annual percentage and typically range from around 6% for long-term permanent financing on stabilized assets up to 13% or higher for short-term bridge or hard money loans on transitional properties. The rate reflects the lender’s risk and the flexibility they are providing.
There is no universal commercial loan rate. Every deal is priced individually. That is why working with a broker who knows which lenders price which deals favorably is worth far more than shopping rate sheets.
What Affects Your Commercial Loan Rate?
Commercial loan rates are driven by a combination of deal-level factors, borrower profile, and market conditions. Understanding what moves rates up or down puts you in a stronger position to negotiate and structure your deal effectively.
Loan Type and Term
The single biggest driver of your rate is what kind of loan you need. Bridge loans and hard money carry the highest rates because they close fast and fund deals that traditional lenders will not touch. Permanent loans carry the lowest rates because they are long-term, lower-risk financing on stabilized assets.
Loan-to-Value Ratio
The more leverage you take, the higher the rate. A loan at 60% LTV is lower risk to the lender than one at 75% LTV, and that difference shows up in your rate. Nelson Funding’s direct bridge program goes up to 70% LTV — on the higher end of what the market offers for transitional assets.
Property Type and Condition
Stabilized, income-producing properties get better rates than transitional, vacant, or under-construction assets. A fully leased multifamily building will price better than a partially completed retail center.
Borrower Profile
Credit score, net worth, liquidity, and real estate experience all factor into pricing. Nelson Funding’s direct bridge program requires a 680+ FICO with no prior bankruptcy or short sale. Experienced sponsors with strong track records consistently get better terms than first-time borrowers.
Market and Timing
Rates move with broader market conditions, including the federal funds rate, Treasury yields, and credit market appetite. In tightening environments, lenders price deals more conservatively. In competitive markets, pricing can improve significantly for strong deals.
Lender Type
Banks, debt funds, private lenders, and bridge lenders all price risk differently. A bank might offer a lower rate but require 90 days and perfect documentation. A bridge lender charges more but closes in 10 days. The right lender for your deal is the one whose risk appetite matches your situation — not the one with the lowest headline rate.
Typical Commercial Loan Rate Ranges
Commercial loan rates typically range from 6% to 14%+ depending on loan type, property, and risk level. Permanent loans on stabilized assets fall on the lower end, while bridge and construction loans carry higher rates due to the speed and flexibility they provide.
These are real ranges based on current market conditions and Nelson Funding’s direct lending program. Rates vary by deal, market, and lender. Use these as a starting point for evaluating your options, not as a guarantee of what you will receive.
| Loan Type | Interest Rate | Origination Fee | Avg. Close Time |
|---|---|---|---|
| Bridge Loan | 10.5% – 12%+ | 1.5% – 2.5% | 7 – 14 days |
| Construction Loan | 10% – 13%+ | 1.5% – 2.5% | 30 – 45 days |
| Permanent Loan | 6% – 9% | 0.5% – 1.5% | 45 – 60 days |
| Hard Money | 11% – 14%+ | 2% – 4% | 5 – 10 days |
| SBA 504 | 5.5% – 7.5% | 0% – 1% | 60 – 90 days |
A few things to understand about these ranges. First, the rate is not the only cost. Origination fees, legal fees, appraisal costs, and extension fees all add to the total cost of the loan. Second, the lowest rate is not always the best deal. A permanent loan at 7% that takes 75 days to close costs you the deal if the seller needs to close in three weeks.
The rate is the price of the money. The structure is the value of the deal. The right broker helps you see the difference.
Nelson Funding Direct Bridge Lending Program
Nelson Funding operates a direct bridge lending program with published parameters so borrowers know exactly what to expect before submitting a deal. There are no surprises, no bait-and-switch on terms, and no prepayment penalties.
| Parameter | Details |
|---|---|
| Loan Size | $2,000,000 – $20,000,000+ |
| Interest Rate | 10.5% – 12%+ |
| Origination Fee | 1.5% – 2.5% |
| Max LTV / LTC | 70% |
| Close Timeline | Under 2 weeks |
| Prepayment Penalty | None |
| Borrower Profile | 680+ FICO, no prior BK or short sale |
| Target States | CA, TX, AZ, UT, FL, WA, OR, CO, ID |
| Loan Purpose | Cash-out, fast close, value-add, bridge to stabilization, investment |
| Property Types | Multifamily, SFR, Industrial, Retail, Mixed-Use |
These parameters cover Nelson Funding’s direct program. We also broker deals to 50+ additional lenders, which expands the range of available terms significantly for deals that fall outside these parameters.
Why Rates Differ Between Lenders
Two lenders can offer dramatically different rates on the same deal. The difference is not about one being better than the other — it is about what each lender is optimizing for, and whether your deal fits their specific appetite.
Banks
Banks offer the lowest rates but come with the most restrictions. They require fully stabilized assets, extensive documentation, strong personal financial statements, and 60 to 90 days to close. If your deal checks every box, a bank is worth pursuing. If it does not, a bank’s low rate is irrelevant because they will not fund the deal.
Debt Funds and Private Lenders
Debt funds and institutional private lenders sit between banks and hard money. They offer more flexibility than banks and better pricing than hard money, making them the right fit for most complex commercial deals. Nelson Funding accesses this market through 50+ lender relationships, matching each deal to the lender whose program fits best.
Hard Money Lenders
Hard money lenders offer the fastest approvals and the most flexible underwriting, but at the highest rates and lowest LTVs. They are the right tool for distressed assets, very fast timelines, or borrowers with significant credit challenges. They are not the right tool for deals where better options exist.
Brokers vs. Going Direct
Many borrowers assume going direct to a lender saves money. In practice, a broker with strong lender relationships usually gets better pricing than a borrower going direct, because lenders reserve their best terms for deal flow partners they trust. Nelson Funding’s volume and relationships consistently translate into better terms for clients than they could source independently.
Hidden Costs to Watch for Beyond the Interest Rate
The interest rate is only part of what a commercial loan costs. Borrowers who evaluate deals on rate alone often miss the costs that materially change the economics of the transaction.
- Origination fees: typically 1.5% to 2.5% on bridge loans, 0.5% to 1.5% on permanent financing. On a $5M loan, a 2% origination fee is $100,000 paid at closing.
- Appraisal and environmental reports: these are third-party costs paid by the borrower regardless of whether the loan closes, typically $3,000 to $10,000+ depending on asset complexity.
- Legal fees: lender legal fees are often passed to the borrower on commercial transactions, ranging from $5,000 to $25,000+ on larger deals.
- Extension fees: if you need more time at maturity, most lenders charge an extension fee of 0.25% to 1% of the loan balance per extension period.
- Prepayment penalties: some lenders charge a fee for paying off the loan early. Nelson Funding’s direct bridge program has no prepayment penalty, which matters for borrowers who plan to refinance or sell before maturity.
- Rate lock fees: on permanent loans, locking your rate during a period of rate volatility may carry a fee of 0.1% to 0.5% of the loan amount.
A good broker puts all of these costs on the table upfront so you can evaluate the true cost of the loan — not just the headline rate.
Real Deals: What Nelson Funding Has Closed and at What Terms
Numbers on a page are one thing. Closed deals are another. Here is how rate and structure played out on real transactions.
$10,000,000 Cash-Out Refinance — West Haven, UT — Retail Development
A sponsor needed liquidity to complete construction on a partially finished retail development and improve leasing efforts before stabilization. Traditional lenders passed because the asset was transitional and the structure was complex.
Nelson Funding sourced a 70% LTV loan at a competitive rate for a transitional asset, with a flexible lien release feature built into the structure to accommodate outparcel sales and pad dispositions as the project leased up. The borrower got meaningful capital at a rate that made the deal economics work, with the structural flexibility that no bank would have offered at any rate.
This deal illustrates the core point: the rate matters, but the structure is what actually makes the deal work. A bank might have offered a lower rate and still killed the deal by refusing the lien release provision.
$5,575,000 Bridge Loan — Dallas, TX — Luxury Rental Portfolio
Three luxury single-family rentals needed a rapid capital solution at 70% LTV. The borrower needed liquidity fast to pursue additional investment opportunities. Nelson Funding closed in 10 days at 70% LTV with terms that allowed the borrower to deploy the capital immediately.
The rate on this deal reflected the speed and leverage involved. The borrower understood the cost and chose certainty of execution over a cheaper loan that might not have closed in time.
$70,200,000 Construction Loan — Park City, UT — Luxury SFR Community
At $70.2M, the Wakara community in Park City required construction financing at a scale that most lenders cannot underwrite. Rates on construction loans at this size reflect the complexity of draw management, the development timeline, and the exit strategy. Nelson Funding’s lender relationships at the institutional level made this deal possible.
View more transactions at Nelson Funding recent closings.
How to Get the Best Commercial Loan Rate for Your Deal
Getting the best rate is not about finding the cheapest lender. It is about presenting your deal in the strongest possible way to the lender most likely to price it favorably.
- Know your numbers before you call. LTV, DSCR, property value, loan amount, and your exit strategy. Borrowers who walk in prepared get better terms because lenders price uncertainty into the rate.
- Have a clear exit strategy. Lenders price based on risk. A borrower who can clearly articulate how the loan gets repaid is a lower-risk borrower, and lower risk means better terms.
- Work with a broker who knows which lenders want your deal type. Not every lender prices every deal type the same way. Nelson Funding’s 50+ lender relationships mean we know which lenders are actively seeking deals like yours right now.
- Do not over-leverage if you do not need to. Every additional point of LTV costs rate. If you can structure at 65% instead of 70%, your rate improves.
- Get multiple term sheets. Never take the first offer without comparing it to at least one alternative. A broker does this automatically by shopping your deal across multiple lenders simultaneously.
- Understand the full cost, not just the rate. Compare origination fees, legal costs, extension terms, and prepayment penalties across term sheets. The cheapest rate is not always the cheapest loan.
Before focusing on rate, make sure you understand how to qualify for a commercial loan and the full range of commercial real estate loan types available.
